...one of our favorite sites.... As a quick follow up, here is a quote from a research paper by Richard Disney and others:

However, we do find a strong asymmetry in the response for households in “negative equity”—households in negative equity experiencing a surprise gain exhibit a consumption response five times stronger than households that had initially positive equity values in their housing stock.”

Again, the MPC estimate that Geithner uses is absurdly small, outside of the range that most economists use...."

...which are easily fact-checked. So let’s turn to pages 79-81, where Geithner is covering his early tenure as the president of the New York Fed....

In my very first public speech at the New York Fed in March 2004, I tried to push back against complacency, telling a room full of bankers that the wonders of the new financial world would not necessarily prevent catastrophic failures of major institutions, and should not inspire delusions of safety on Wall Street. I even cited my favorite theorist on financial irrationality, the leading promoter of the idea that periodic financial crises are practically inevitable.

“These improvements are unlikely to have brought an end to what Charles Kindleberger called ‘manias and panics,’ ” I said. “It is important that those of you who run financial institutions build in a sufficient cushion against adversity.” …

This is Geithner at his most prescient and heroic. He enters a hidebound wood-paneled institution where coffee is brought to his desk on a silver tray while briefings involved precious little discussion or debate; and in his very first speech he... speak[s] truth to entrenched financial power... 'push[es] back against complacency' and warn[s] against the rise of the shadow banking system....

Well, I think academic econ has. But as for pop econ, there still seems to be a lot of it around. For example, Steve Levitt, one of the most popular pop economists in the world, recently had this to say about health care:

In their latest book, Think Like a Freak, co-authors Steven Levitt and Stephen Dubner tell a story about meeting David Cameron...They told him that the U.K.’s National Health Service--free, unlimited, lifetime heath care--was laudable but didn’t make practical sense. "We tried to make our point with a thought experiment," they write. "We suggested to Mr. Cameron that he consider a similar policy in a different arena. What if, for instance...everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model, free of charge, and drive it home?"
Rather than seeing the humor and realizing that health care is just like any other part of the economy, Cameron abruptly ended the meeting...

So what do Dubner and Levitt make of the Affordable Care Act, aka Obamacare, which has been described as a radical rethinking of America's health care system? "I do not think it's a good approach at all," says Levitt, a professor of economics at the University of Chicago. "Fundamentally with health care, until people have to pay for what they're buying it's not going to work. Purchasing health care is almost exactly like purchasing any other good in the economy. If we're going to pretend there's a market for it, let's just make a real market for it."

This is exactly what I call "free market priesthood". Does Levitt have a model that shows that things like adverse selection, moral hazard, principal-agent problems, etc. are unimportant in health care? Does he have empirical evidence that people behave as rationally when their health and life are on the line as when buying a car? Does he even have evidence that the British health system, specifically, underperforms? No. He doesn't. All he has is an instinctive belief in free markets. Of course David Cameron didn't "realize that health care is just like any other part of the economy" after a five minute conversation with Levitt. Levitt didn't bring any new ideas or evidence to the table. And it's not like Levitt's idea was new or creative or counterintuitive. Does anyone seriously believe that the question of "why is health care different from other markets" had never crossed David Cameron's mind before? Obviously it has, and obviously Levitt knew that when he asked his question. He wasn't offering policy advice--he was grandstanding. Levitt wants to present himself as "thinking like a freak"--offering insightful, counterintuitive, original thinking. But if this is "thinking like a freak", I'd hate to see what the normal people think like!

Surely it has not escaped Levitt's notice that the countries with national health systems spend far less than the United States and achieve better outcomes. How does he explain this fact? Does he think that there is an "uncanny valley" halfway between fully nationalized health systems and "real markets", and that the U.S. is stuck in that uncanny valley? If so, I'd like to see a model. But I don't think Levitt has a model. What he has is a simple message ("all markets are the same"), and a strong prior belief in that message. And he keeps repeating that prior in the face of the evidence.

This was supposed to be part of The Honest Broker about conservative objections that ObamaCare was an unwarranted and unnecessary infringement on negative liberty--on individual "freedom". But it was unsuccessful. It ran into two things along the way. First, it ran into my complete failure while teaching Economics 2 to successfully draw a line between "negative" and "positive" liberty that would allow one to say that the competitive market equilibrium was in some sense a perfection of negative liberty and that further restrictions on it were not: I wound up convincing myself that it was the jungle equilibrium that was the perfection of negative liberty, and from that point forward it was utilitarian promotion of positive at the expense of negative liberty all the way down...

Why was the "Rubin Question" not asked? Why didn't every meeting end with: "What do we need to do today in order to create room to maneuver in case our assessment of the economy is wrong?"? Why was there no contingency plan for what to do if the administration's view of the economy turned out to be wrong, and if the recession was either not relatively shallow nor followed by a strong, rapid recovery? Good question, totally agree.

Why did the Treasury's loans to banks via the TARP come with neither bankruptcy-control rights (i.e., the ability to throw the organization into the courts if the government was displeased) nor shareholder-control rights (i.e., the ability to replace the boards of directors and the top management if the government was displeased)? He who pays the piper should call the tune, right? It was early in the game and everyone (except you and Paul Krugman) was scared of THE DREADED STATE OWNERSHIP. But Geithner ought to be made to say this out loud.

Why was the Treasury's first priority in January 2009 not filling the post of Director of the FHFA with somebody smart who understood the depths of the housing finance crisis, the housing finance crisis's role in causing and maintaining the catastrophe, and the potential macroeconomic benefits to be gained from resolving the housing finance crisis? Nearly all such people wouldn't have gone near the job because of the reputational risk.

Why was the Treasury's second priority in January 2009 not filling the Federal Reserve with Keynesian macroeconomists to balance the austerity-minded regional reserve bank governors, and not thus giving Ben Bernanke and his successor room to maneuver to pursue technocratic dual-mandate policies? An excess of Very Seriousness. I realise this is basically a rhetorical question though, along the lines of "why did this more or less economically illiterate, non-Keynesian administration, consistently fail to appoint Keynesians who knew what they were doing?"

Why was the Treasury's third priority in January 2009 not setting-up the game table to make enacting a second round of fiscal stimulus easy, should the Recovery Act turn out (as it did, and is Christina Romer warned at the time) to be less than half as large as it should have been? See above...

Why did the spring 2009 PPiP program never go much of anywhere? It seemed to me at the time to be a very wise way--albeit a very risky way--to utilize TARP money. Too tricksy and think-tank-wonky. Too many bells and whistles. In a crisis, everyone's mental bandwidth is maxed out and so clever-clever solutions never work.

The Treasury senior-executive team that was assembled seemed to me to be relatively light on all of (a) Wall Street trading and management experience to actually interface with the financial firms to which the TARP money had been committed, (b) Fed-watching experience, (c) macroeconomic policy expertise, and (d) health-care finance expertise. Given that running the TARP, attempting to bring the Federal Reserve's FOMC to a state of understanding of the economy, spurring a strong and rapid recovery, and implementing health-care reform were the administration's top priorities, why were the Treasury's senior executives--excellent people, all--who they were? Don't know. Suspect that the depth of bench in Treasury is not what it was when you worked there.

Former Obama OMB Director Peter Orszag has said if he had properly understood and internalized the lessons of work like Rinehart-Rogoff on the likelihood of slow recovery after financial crises he would have taken a significantly different position in the Obama administration NEC's policy debates in 2009-10--a position closer to Romer-Summers than to Geithner.early 2009 and would have argued that the Recovery Act should have contained significantly more long-run insurance against an "L"-shaped recover.[1] How many of what clearly were, in retrospect, unforced macroeconomic policy errors by the Obama administration due to this failure to understand the likelihood of a prolonged, slow "jobless recovery"? Lots of them, although Orzag's sincerity can't be taken for granted.

What were the three biggest unforced macroeconomic policy errors of the Obama administration, and why were they made? Inadequate stimulus, three times. Made first time round because Summers thought he was dealing with 1998-replay, and then second and third times round out of timidity with respect to Congress.

The Obama administration began with two among the most-senior policymakers--Lawrence Summers and Christina Romer--having deep understanding of the macroeconomics of full employment and inflation and of the two episodes, the Great Depression and Japan's "lost decades", thought to be relevant to the U.S. situation at the end of the 00 decades. When they left in 2010 that expertise was not replaced at the most senior level. Why not? Why no Blinders or Tysons? Might have given advice that the Obama/Geithner/VSP community didn't want to be given.

What was the thinking behind the decision that Ben Bernanke should--after 2007-9--be offered a second term as Federal Reserve chair? In retrospect, is that thinking still defensible? If not, why was that thinking convincing at the time? TBH, Bernanke didn't do a bad job in the face of total lack of help from the fiscal side. I don't think there's a question to be answered here.

I understand that Neil Barofsky at SIGTARP was regarded by the Treasury as somewhat of a loose cannon, but why was that relationship handled so badly? Because twenty years' worth of regulatory capture isn't undone in a fortnight, even in conditions like 2008-9.

I understand why the Treasury might think that Michael Barr was a better choice to run the CFPB than Elizabeth Warren, but why was that relationship handled so badly? Same answer as 12, with possible additional hints of sexism. OTOH, having run her out of the CFPB, the banking industry then ended up getting Prof. Warren to deal with on the Senate Banking Committee, so heckuva job lobbyists.

Why did the Obama administration in 2011 think that the way to strengthen the economy was to pursue a long run "grand bargain" rather than to pursue short-run expansionary exchange rate, bank regulation, housing finance, and monetary policies? Because he's the management consultancy boss from hell who will always avoid taking a difficult decision if he isn't personally committed to it.

Why was the Obama administration so certain in 2011 that Boehner wanted to come up with a reasonable long-run entitlement reform and tax increase deal, and that its key negotiating strategy should be to make anticipatory concessions in order to make sure the deal was sweet enough for Boehner to be able to convince his troops to take it? Literally no idea, but this is also surely a rhetorical question; if Geithner was capable of giving a sensible answer to it, he would surely not have made the mistake in the first place.

Why was there never any explanation of what would happen in the event of a potential breach of the debt ceiling other than "default is unthinkable"? That line put Obama in a very poor bargaining position. The Republican leaders in the House could then pass what they wanted and adjourn--leaving the Senate with no option but to endorse it or to breach the debt ceiling. Obama would then have no option but to sign the House bill or breach the debt ceiling. Can anybody explain to me this throwing-away of the administration's power to threaten not to sign whatever was on the president's desk when the click ticked down to zero? Good question, agree.

I understand that there was no macroeconomic policy between July 2009 and April 2010 because health-care reform soaked up all the oxygen. But why was there no macroeconomic policy in the Obama administration between April 2010 and November 2010? The facts from 2010 ought to make you consider whether the excuse was valid in 2009 either.

I remember a phone conversation with Tim Geithner about Obama's decisive turn to and endorsement of "austerity"--the passage in Obama's 2010 State of the Union address that went: "Families across the country are tightening their belts and making tough decisions. The federal government should do the same. So tonight, I'm proposing specific steps to pay for the trillion dollars that it took to rescue the economy last year.Starting in 2011, we are prepared to freeze government spending for three years..." Geithner told me: "I know that [senior administration official X] and [senior administration official Y] really think that I was an [expletive] for not strongly opposing that, but I did not support it." If the Treasury Secretary did not support it, how did it get approved by the NEC? If it did not get approved by the NEC, how did it get into the State of the Union text? Who did support it? Why did they support it? Very good question, although the possible explanation "Geithner wasn't being wholly candid with you on the phone" comes to mind.

I remember a phone conversation with Tim Geithner in which Geithner said that entrenched and incumbent FHFA head Ed DeMarco would "push the limits of the reasonable envelope" with actions to accelerate and encourage the refinancing of underwater mortgages. Why did Ed DeMarco not do so? Why did Tim Geithner think he would? Institutional impossibility of getting anyone to get anything done in the god damn mortgage industry, IMO.

Why was it not the first priority in deciding on the Federal Reserve chair to pick somebody who had had a substantially-correct understanding in 2007-9 of what was happening to the economy? All such people might have given advice that they didn't want to receive.

Why was the "Rubin Question" not asked? Why didn't every meeting end with: "What do we need to do today in order to create room to maneuver in case our assessment of the economy is wrong?"? Why was there no contingency plan for what to do if the administration's view of the economy turned out to be wrong, and if the recession was either not relatively shallow nor followed by a strong, rapid recovery?

Why did the Treasury's loans to banks via the TARP come with neither bankruptcy-control rights (i.e., the ability to throw the organization into the courts if the government was displeased) nor shareholder-control rights (i.e., the ability to replace the boards of directors and the top management if the government was displeased)? He who pays the piper should call the tune, right?

Why was the Treasury's first priority in January 2009 not filling the post of Director of the FHFA with somebody smart who understood the depths of the housing finance crisis, the housing finance crisis's role in causing and maintaining the catastrophe, and the potential macroeconomic benefits to be gained from resolving the housing finance crisis?

Why was the Treasury's second priority in January 2009 not filling the Federal Reserve with Keynesian macroeconomists to balance the austerity-minded regional reserve bank governors, and not thus giving Ben Bernanke and his successor room to maneuver to pursue technocratic dual-mandate policies?

Why was the Treasury's third priority in January 2009 not setting-up the game table to make enacting a second round of fiscal stimulus easy, should the Recovery Act turn out (as it did, and is Christina Romer warned at the time) to be less than half as large as it should have been?

Why did the spring 2009 PPiP program never go much of anywhere? It seemed to me at the time to be a very wise way--albeit a very risky way--to utilize TARP money.

The Treasury senior-executive team that was assembled seemed to me to be relatively light on all of (a) Wall Street trading and management experience to actually interface with the financial firms to which the TARP money had been committed, (b) Fed-watching experience, (c) macroeconomic policy expertise, and (d) health-care finance expertise. Given that running the TARP, attempting to bring the Federal Reserve's FOMC to a state of understanding of the economy, spurring a strong and rapid recovery, and implementing health-care reform were the administration's top priorities, why were the Treasury's senior executives--excellent people, all--who they were?

Former Obama OMB Director Peter Orszag has said if he had properly understood and internalized the lessons of work like Rinehart-Rogoff on the likelihood of slow recovery after financial crises he would have taken a significantly different position in the Obama administration NEC's policy debates in 2009-10--a position closer to Romer-Summers than to Geithner.early 2009 and would have argued that the Recovery Act should have contained significantly more long-run insurance against an "L"-shaped recover.[1] How many of what clearly were, in retrospect, unforced macroeconomic policy errors by the Obama administration due to this failure to understand the likelihood of a prolonged, slow "jobless recovery"?

What were the three biggest unforced macroeconomic policy errors of the Obama administration, and why were they made?

The Obama administration began with two among the most-senior policymakers--Lawrence Summers and Christina Romer--having deep understanding of the macroeconomics of full employment and inflation and of the two episodes, the Great Depression and Japan's "lost decades", thought to be relevant to the U.S. situation at the end of the 00 decades. When they left in 2010 that expertise was not replaced at the most senior level. Why not? Why no Blinders or Tysons?

What was the thinking behind the decision that Ben Bernanke should--after 2007-9--be offered a second term as Federal Reserve chair? In retrospect, is that thinking still defensible? If not, why was that thinking convincing at the time?

I understand that Neil Barofsky at SIGTARP was regarded by the Treasury as somewhat of a loose cannon, but why was that relationship handled so badly?

I understand why the Treasury might think that Michael Barr was a better choice to run the CFPB than Elizabeth Warren, but why was that relationship handled so badly?

Why did the Obama administration in 2011 think that the way to strengthen the economy was to pursue a long run "grand bargain" rather than to pursue short-run expansionary exchange rate, bank regulation, housing finance, and monetary policies?

Why was the Obama administration so certain in 2011 that Boehner wanted to come up with a reasonable long-run entitlement reform and tax increase deal, and that its key negotiating strategy should be to make anticipatory concessions in order to make sure the deal was sweet enough for Boehner to be able to convince his troops to take it?

Why was there never any explanation of what would happen in the event of a potential breach of the debt ceiling other than "default is unthinkable"? That line put Obama in a very poor bargaining position. The Republican leaders in the House could then pass what they wanted and adjourn--leaving the Senate with no option but to endorse it or to breach the debt ceiling. Obama would then have no option but to sign the House bill or breach the debt ceiling. Can anybody explain to me this throwing-away of the administration's power to threaten not to sign whatever was on the president's desk when the click ticked down to zero?

I understand that there was no macroeconomic policy between July 2009 and April 2010 because health-care reform soaked up all the oxygen. But why was there no macroeconomic policy in the Obama administration between April 2010 and November 2010?

I remember a phone conversation with Tim Geithner about Obama's decisive turn to and endorsement of "austerity"--the passage in Obama's 2010 State of the Union address that went: "Families across the country are tightening their belts and making tough decisions. The federal government should do the same. So tonight, I'm proposing specific steps to pay for the trillion dollars that it took to rescue the economy last year.Starting in 2011, we are prepared to freeze government spending for three years..." Geithner told me: "I know that [senior administration official X] and [senior administration official Y] really think that I was an [expletive] for not strongly opposing that, but I did not support it." If the Treasury Secretary did not support it, how did it get approved by the NEC? If it did not get approved by the NEC, how did it get into the State of the Union text? Who did support it? Why did they support it?

I remember a phone conversation with Tim Geithner in which Geithner said that entrenched and incumbent FHFA head Ed DeMarco would "push the limits of the reasonable envelope" with actions to accelerate and encourage the refinancing of underwater mortgages. Why did Ed DeMarco not do so? Why did Tim Geithner think he would?

Why was it not the first priority in deciding on the Federal Reserve chair to pick somebody who had had a substantially-correct understanding in 2007-9 of what was happening to the economy?

So this morning I am reading the highly-intelligent Reihan Salam's bill of indictment against ObamaCare. He says that ObamaCare "will eventually have to be either drastically reformed or replaced outright" because of its many problems. As I, at least, read the problems he thinks he sees, I find myself thinking that they are of five kinds:

(1) Problems that seem to me to be problems of politics:

The more familiar people become with Obamacare and its consequences, the less they like it....

62 percent oppose the law, an increase of 4 percentage points since November....

20 states... have so far refused to take part in [Medicaid expansion].

Over at the WCEG: I still do not have a copy of Tim Geithner's Stress Test. That means I cannot take on the task of explaining, justifying, and putting in context (1) Bernanke-Geithner Federal Reserve and then (2) Obama administration macroeconomic policies from 2007-2012. All I can do right now is lay out my own errors of judgment from 2007-2012.

As I look back, I see that my serious errors of judgment were only secondarily about the state of the economy. They were primarily and overwhelmingly about senior Bernanke-Geithner Federal Reserve and Obama-Geithner policymakers and (a) how they viewed the economy and (b) what policies they would pursue.

...Geithner had a predisposition that Wall Street, even as it was, remained essential to the functioning of the U.S. economy in just about every sector:

I did not view Wall Street as a cabal of idiots or crooks. My jobs mostly exposed me to talented senior bankers, and selection bias probably gave me an impression that the U.S. financial sector was more capable and ethical than it really was. READ MOAR

...Kansas definitely won’t be expanding its Medicaid program this year.... Brownback signed House Bill 2552, which removes his authority to accept Obamacare’s Medicaid expansion and requires the legislature to approve the policy. Since lawmakers have already concluded their session for the year, that means the state won’t be able to move on Medicaid expansion in 2014. And even if a Democratic governor is elected in the fall, the Republicans in the legislature could continue to block expansion....

Anti-Obamacare lawmakers have dug in their heels against it:

It doesn’t take a position on whether or not Medicaid expansion under the Affordable Care Act should take place in Kansas. But what it does say is it should be up to the people’s elected representatives to make that decision...

Rep. John Rubin (R), one of the primary supporters of the legislation, told the Wichita Eagle....

Now that Obamacare is fully in effect, and millions of people are gaining coverage under the law, Republican lawmakers have been more hesitant to publicly acknowledge their opposition to expanding Medicaid.... Kansas isn’t alone. Over 20 GOP-led states have refused to expand Medicaid, leaving about six million of the poorest Americans without any access to affordable health care whatsoever. The people who live in those states are already disproportionately poorer and sicker than the people living in the states that are accepting the expansion. The ongoing resistance to this Obamacare provision threatens to widen those regional disparities even further...

...It was more of a sneaky lie. The kind of lie that sounds sincere when it's told, and doesn't register as the most dangerous of deceits until it is too late.... Your state leaders lied when they told you they would come up with an alternative to Medicaid expansion. You remember that, right?... Rick Scott said he couldn't in good conscience deny health care to uninsured residents during the three years the federal government was footing the entire bill? Back when the Senate came up with a plan to use Medicaid funds to purchase private insurance for the poorest of poor among us? Back when the House rejected federal funds of any kind? "If we're going to say 'no' to Medicaid expansion, let's say "yes' to something," Sen. Joe Negron, R-Stuart, said more than a year ago.

As a black woman, I am the keeper of many things. Chief among them is the hope of black men. A black man introduced into the criminal justice system for any violation, no matter how minor becomes a son who cannot care for big momma, a brother who can’t hold down his siblings, a mate who can’t promise a paycheck, and a father who is a parent only when the penal system says he can be.... Last night I called the police on a black man....

...Was the black family better off as property?—is as immoral as it unoriginal. As both Adam Serwer and Jamelle Bouie point out, the roster of conservative theorists who imply that black people were better off being whipped, worked, and raped are legion. Their ranks include economists Walter Williams and Thomas Sowell, former congressman Allen West, sitting Representative Trent Franks, singer Ted Nugent, and presidential aspirants Rick Santorum and Michele Bachmann. A fair-minded reader will note that each of these conservatives is careful to not praise slavery and to note his or her disgust at the practice. This is neither distinction nor difference....

...and hit every single branch of the evil tree on the way down. As Jon Gruber said, the propaganda from the Republican Party to scare people away from taking advantage of their benefits under the ACA is "awesome in its evilness".

wanted nothing to do with the Affordable Care Act. "I don't read what the Democrats have to say about it because I think they're full of it," he told his friend Bob Leinhauser, who suggested he sign up. That refrain changed this year when a faulty aortic valve almost felled Angstadt.... "A lot of people I talk to are so misinformed about the ACA," Angstadt said. "I was, before Bob went through all this for me. I would recommend it to anybody and, in fact, have encouraged friends, including the one guy who hauls my logs."... It was taking him 10 minutes to catch his breath after felling a tree. By fall, he was winded after traveling the 50 feet between his house and truck.... "I knew that I was really sick," said the Boyertown resident. "I figured the doctors were going to have to operate, so I tried to work as long as I could to save money for the surgery. But it got to the point where I couldn't work."...

...conservatives undertook... to discourage people... from enrolling in ACA-compliant health plans... to deny state-based insurance markets critical mass... and send them into actuarial death spirals... appealing to strangers to undertake considerable personal risk in service of dubious ideological principles... [and] almost certainly succeeded at convincing some people to skip Obamacare.... [C]onservatives now want you to be outraged about the fact that the Affordable Care Act creates limited open-enrollment periods each year to prohibit precisely that kind of free riding....

Jedediah Purdy:To Have and Have Not: "Piketty recommends a small, progressive global tax on capital to draw down big fortunes and press back against r > g. He admits this idea won’t get much traction at present, but recommends it as a... measure of what would be worth doing and how far we have to go to get there. It’s an excellent idea, but it also shows the limits of Piketty’s argument. He has no theory of how the economy works that can replace the optimistic theories that his numbers devastate. Numbers — powerful ones, to be sure — are what he has.... Without a theory of how the economy produces and allocates value, we can’t know whether r > g will hold into the future. This is essential to whether Piketty can answer his critics, who have argued that we shouldn’t worry much... [because other economic forces will] blunt r > g. Piketty doesn’t really have an answer to these challenges, other than the weight of the historical numbers....

"We should grope toward a more general theory of capitalism by getting more systematic about two recurrent themes in Piketty’s work: a) power matters and b) the division of income between capital and labor is one of the most important questions.... The period of shared growth in the mid-20th century was not just the aftermath of war and depression. It was also the apex of organized labor’s power in Europe and North America....

"Piketty shows that capitalism’s attractive moral claims — that it can make everyone better off while respecting their freedom — deserve much less respect under our increasingly 'pure' markets than in the mixed economies that dominated the North Atlantic countries in the mid-20th century. It took a strong and mobilized left to build those societies. It may be that capitalism can remain tolerable only under constant political and moral pressure from the left, when the alternative of democratic socialism is genuinely on the table.... Reading Piketty gives one an acute sense of how much we have lost with the long waning of real political economy, especially the radical kind.... Ideas need movements, as movements need ideas. We’ve been short on both..." READ MOAR

Charles Koch complains about the character assassination he experiences at the hands of Barack Obama, who he says is acting like the despots of the twentieth century like Hitler and Stalin. But why is he silent about the real character assassination he suffers? For that we have to resort to the archives, and the bemused Justin Fox:

The author hilariously sees Austrian economics as divided into two parts: the nice one, entirely in the super-wealthy Koch Brothers ambit, and the mean one, in mine! A little background: when I started the Mises Institute (an organization unmentioned by Time) 26 years ago, the head of the Koch Family Foundation angrily pledged to destroy me if I went ahead. "We have worked too hard to rid Austrian economics of Mises," he said. Hayek, he claimed, was their man, though, of course, he was far better than that, and a good supporter of the Institute. But the real problem turned out to be Murray Rothbard. It was the greatest of the Misesians and the founder of modern libertarianism whom the Koch World Empire longed to smash, and still does. Murray, founder of Cato, was the one man in the ambit to say no when the Kochs decided to jettison Mises for reasons of DC preferment.

So this morning I am reading the highly-intelligent Reihan Salam's bill of indictment against ObamaCare. He says that ObamaCare "will eventually have to be either drastically reformed or replaced outright" because of its many problems. As I, at least, read the problems he thinks he sees, I find myself thinking that they are of five kinds:

...I Skyped with Dr. Jonathan Gruber, who is the Ford Professor of Economics at the Massachusetts Institute of Technology and director of the health care program at the National Bureau of Economic Research. He is also the most famous health economist in the United States. He has won numerous awards, and written countless papers and academic articles. He has even written a graphic novel about health reform.

...the justices set in motion a process that’s now pushing our two countries even further apart as about half of the states passed on the opportunity to insure their poorer residents.... Obamacare appears to have extended insurance coverage to about ten million people who didn’t have it before.... The rate of uninsured is now almost 50 percent higher in states that refused the Affordable Care Act’s (ACA) Medicaid expansion (18.1 percent) than in those that embraced the policy (12.4 percent)....

It is unclear whether Paul Ryan understands what he is doing or not. But if he does, he is laying it all out there--that the Republican health-care endgame is as follows:

If you are already sick, have the wrong genetic markers, or are poor, the plan is for you to beg at your church for money to pay your health care bills.

Health insurance is to be reserved only for those from the middle class who lack adverse genetic markers and who have no preexisting conditions.

Why? Because freedom!

I swing back and forth between thinking that Paul Ryan understands, thinking that he does not understand, and thinking that he just isn't thinking about it but, instead, simply taking whatever step looks most solid without raising his eyes... READ MOAR

...When they took my insurance card, they asked "Is this marketplace or employer insurance?" I answered that it was from my employer. The receptionist said, "Great. We don't take Obamacare." I had a perplexed look on my face, I guess, because she said, "The marketplace has so many kinks that we're just not participating." Is there any reason that this isn't totally kooky? I mean, why should the doctor's office have any idea if an individual plan was purchased on the marketplace, or if the individual just went to Blue Cross Blue Shield directly? Are they saying "no individual policies at all"? Sure enough, there was a sign hanging in the office, which I'll put below the jump. I assume this is just civilian Republican asshattery...

but referenced throughout–which makes the joke yet richer and more multi-layered by the book’s dense 349 page end. It goes like this: There are two people who actually understand the American health system, and both Victor Fuchs and Alain Enthoven are 90 and 83 years of age, respectively. I don’t care if Zeke Emanuel wrote the joke himself because what he did write is the book that should make all of us a little less fearful…. READ MOAR

At least three ex-Governors have assured me over the past three weeks that all or nearly all states will find some way to do Medicaid expansion before the 2016 presidential election--that current governors, even in the reddest of red states, are now more scared of their doctors and their hospital administrators than they are of the Tea Party. And they are beginning to fear that the Keynesians are right and that a failure to expand Medicaid could throw their states back into recession--for state governors and legislators do believe that their state prosperity depends on workers doing things that create exports and thus dollars flowing into the state, and in the flow-of-funds Medicaid expansion is an "export".

and Iowa’s expand-with-“personal-responsibility” approach (allowing more copays and deductibles, and more coercive “healthy choice” programs, than are allowed in traditional Medicaid).... Utah is on the brink of cutting a deal.... Progressives could look at such developments as paving the way for more Republican-governed states to expand Medicaid, which is a good thing, or as concessions that threaten the safety-net features (and “single payer” structure) of Medicaid, which is a bad thing....

But I tell you what: if, God forbid, I were a Republican governor, I’d come up with a package of every conservative pet rock reform I could think of that was applicable for Medicaid, put it into a waiver package, and tell my conservative friends that I was going to try to get Barack Obama to pay for turning Medicaid inside out. However it turned out, I’d be a political winner with the Right.

But Kilgore is wrong: it won't be a political winner on the right--no matter how many bells and whistles are added to the waiver application. The deal-breaker for the right is cooperation--or apparent cooperation--in any way with President Obama...

Sokrates: Production is currently mired some 8% below the growth trend that back in 2008 we confidently thought of as normal and highly unlikely to be disturbed.

Glaukon: It is indeed.

Thrasymakhos: And employment is currently mired some 7% below the proportion of the population that back in 2008 we confidently thought of as normal and highly likely to be quickly reattained after macroeconomic shocks.

Khremistokles: What will you say next, Thrasymakhos? That the sky is blue?

Aristokles: Nobody now expects a return to the "old normal"...

Glaukon: Indeed.

Thrasymakhos: Actually, the sky is grey here in Berkeley, California where we exist, and the morning fog has not yet burned off...

Khremistokles: But why doesn't anyone expect a return to the "old normal"?

Sokrates: If you can say that we "exist" at all, being simply of figments of Brad DeLong's imagination, as he sits at Espresso Roma, drinking coffee, trying to wake up, writing this dialogue, intermittently watching lectures from the "Reason and Persuasion" MOOC of John Holbo, and waiting for Nicholas Lemann... READ MOAR

in so many respects, as... Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius.... Lower court opinions... as well as a majority of the more than eighty briefs filed in the Supreme Court, have been devoted to a question... whether corporations... can exercise religion in a way protected by the Religious Freedom Restoration Act... that is, at best, a distraction.... Those opinions and briefs also repeatedly mischaracterize the relevant statute and regulations... failed to critically examine the facts.... And, contrary to what the plaintiffs and many lower courts have argued, it is untrue that the government’s compelling interests are undermined by an alleged vast network of exemptions that will leave “millions” of women unprotected....

Ezekiel Emanuel is Vice Provost for Global Initiatives and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. A breast oncologist with a doctorate in political philosophy, he served for many years as chair of the Department of Bioethics at The Clinical Center of the National Institutes of Health. From 2009 to 2011, he helped to craft the Affordable Care Act (ACA) as a special advisor for health policy to the director of the White House Office of Management and Budget. While serving in that role, Emanuel was the target of one of the most unfounded political attacks I have witnessed in health policy.

If you could only read one book about the American health system and ACA’s valuable (albeit imperfect) contribution to improving that system, his new book Reinventing American Health Care: How the Affordable Care Act will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System might be the best one.

But northern Maine is among a handful of telling exceptions, making it an important guidepost as the country searches for ways to improve health.... The region now is among America's poorest.... Yet northern Maine ranks high on national measures of health.... Residents of the region receive recommended screenings and medical care more often than other Americans. They suffer fewer complications in nursing homes and are less frequently prescribed risky medications. And they are nearly half as likely to die from preventable diseases as residents of other low-income areas.... Maine's success owes much to the type of care that Patterson typifies — intensely personal, data-driven and highly coordinated. The approach grew out of a decades-long effort by local leaders that many experts consider a model for how to improve community health.

Ryan says there's a problem "in our inner cities in particular," of "generations of men not even thinking about working." "In particular" is a useful qualifier, isn't it?... Ryan's problem, it seems, is that he's talking about inner cities while being 1) a Republican who is 2) about to unleash poverty legislation heavy on work requirements. If you're a Democrat, you can talk about the inner city in the same way Ryan does.

James Kwak:You Don’t Say: "Peter Eavis... highlighted a statement... by... William Dudley (formerly of Goldman Sachs, then a top lieutenant to Tim Geithner):

There is evidence of deep-seated cultural and ethical failures at many large financial institutions....

In 2008... people probably thought that our largest banks were just guilty of shoddy risk management, dubious sales practices, and excessive risk-taking... we’ve had to add price fixing, money laundering, bribery, and systematic fraud on the judicial system....

Framing the problem as a 'trust issue'—customers no longer see banks as trustworthy institutions—is beside the point. Wall Street’s main defense is that its clients already realize that investment banks do not have their buy-side clients’ best interests at heart, and clients who don’t realize that are chumps. And in the wake of the financial crisis, I suspect there are few individuals out there who believe that their banks are there to help them. The banking industry has discovered that it can thrive without trust, which is not surprising; retail depositors trust the FDIC, and bond investors know that trust isn’t part of the equation...

And based on a report in the Washington Post, it will look a lot like their old health care proposals—the ones that would have done very little to improve access, reduce financial distress, and contain health care spending. But this new plan would be different in one key respect. Implementing this sort of Republican plan now would probably mean taking away coverage from quite a lot of people who just got it. That’s a pretty big deal.... The interesting question is how Republicans intend to present this plan.... If Republicans intend to repeal the Affordable Care Act and replace it with the framework that Costa's story describes—or even something with a bit more money behind it—a lot of those people are going to lose... insurance altogether. Until this year, taking away Obamacare meant taking away a hypothetical benefit. Now that benefit is real.... But really, the policy details are sort of irrelevant here. Notwithstanding the efforts of a few dedicated intellectuals and a tiny cadre of federal lawmakers, the vast majority of Republican officials have zero interest in health care reforms that significantly increase access to care. The new House Republican plan was supposed to show otherwise. If they actually manage to produce something—this isn’t the first time they’ve promised a proposal wasn’t imminent—and if it looks like the media reports suggest, the plan will merely confirm everybody’s suspicions: Significantly increasing access to health care just isn’t a priority for today’s Republican Party.

Lesson 1: the NRA would rather not have its role in the debate public:

Jared Bernstein: The Paradoxical Position of the National Restaurant Association in the Minimum Wage Debate: “We learn in today’s paper that unknown to its signers, the opponents’ letter was organized and even partially drafted by the National Restaurant Association (NRA)…. OK, clearly smarmy but biz as usual in DC. Clearly, the (other) NRA thought they’d lose signatories if they revealed their role, a fear the Economic Policy Institute, a research organization (where I used to work), did not share. READ MOAR

This was the conclusion of The New Republic, summarizing Franklin Delano Roosevelt and the New Deal in May 1940.... Though the magazine believed the New Deal did more for the general welfare than any other administration, and even helped shift the ideological space against laissez-faire conservatism, they weren’t sure whether they could say they supported it. “If the New Deal is to deserve our support in the future, it must not rest on what it has already done, great as that is, but tell us how it is going to finish the task.” In other words, being disappointed in Democratic presidents is what opinion editors refer to as “evergreen” content....

a Nobel Prize-winning professor of economics and law at Chapman University in Orange, Calif., concluding that the minimum wage “is a poorly targeted antipoverty measure.”... But the statement itself and the news release heralding the effort made no mention of the fact that the statement had been initiated by staff at the restaurant association, who through an intermediary asked Mr. Smith if it could be distributed under his name, the association and Mr. Smith acknowledged in interviews Friday.

“If that was not made clear, I will apologize for that,” said Sue Hensley, the senior vice president for public affairs at the National Restaurant Association. She said the restaurant association had distributed the statement the way it had because it was technologically the easiest method, not because of any intentional effort to hide the organization’s role.

Dianne Feinstein: "Over the past week, there have been numerous press articles written about the Intelligence Committee’s oversight review of the Detention and Interrogation Program of the CIA,

specifically press attention has focused on the CIA’s intrusion and search of the Senate Select Committee’s computers as well as the committee’s acquisition of a certain internal CIA document known as the Panetta Review.

I rise today to set the record straight and to provide a full accounting of the facts and history.

Ed Kilgore:The Central Flaw in Hobby Lobby’s Suit: "To hear many conservatives and even some liberals, the suit brought by the for-profit company Hobby Lobby seeking relief from the contraception coverage mandate of the Affordable Care Act represents a last line of defense by religious believers (of a certain type, to be sure) against the aggressive secularist agenda of the Obama administration.

Buying into that idea has always required some mental gymnastics. The coverage mandate does not require that employers supply employees with contraceptives. It simply requires that if they provide health insurance it must include coverage for certain preventive procedures, devices and medications, including contraceptives. The employee chooses whether or not to avail herself of this coverage, and no reasonable person would hold the employer morally responsible for that choice, any more than if the employee used her wages to purchase the very same contraceptives, which—lest we forget—are not only legal but are constitutionally protected as legal.

Some voters want goodies; other voters want low taxes; politician satisfy them by expanding programs and cutting taxes, producing debt. The debt must either be amortized through high taxes that discourage investment and entrepreneurship or through printing money which produces inflation and also deranges the price system and slows growth.

Thus, I was told over and over again, the economic problems of the north Atlantic in the 1970s and 1980s–the productivity growth slowdown in the inflation of the 1970s–were the result of an overly-large welfare state produced by an overly-democratic government. Both of these, the argument went, needed to be fixed.

Thomas Frank: Paul Krugman won’t save us: “When President Obama declared in December that gross inequality is the ‘defining challenge of our time’, he was right, and resoundingly so…. However, he quickly backed away… at the urging of pollsters and various Democratic grandees. I can understand the Democrats’ fears… a throwback to an incomprehensible time…. Unfortunately, they really have no choice. Watching… the bankers steered us into disaster in 2008 and then… harvested the fruits of our labored recovery–these spectacles have forced the nation to rediscover social class…

My thought here is to ask the Tonto question: “Who is this ‘us’, kemosabe?” The nation–with the exception of the top 1%, who understand social class very well–has not rediscovered social class. If the nation had rediscovered social class, “inequality” would poll better and “upward mobility” would poll worse–would be seen as the mess of overdone pottage that it is. I think we would have a healthier politics if the 99% had rediscovered social class. But pretending it has does not make it so. There is a big task of education and analysis ahead. And trashing Paul Krugman is a rather odd exercise to engage in, given that Paul Krugman has been raising the hue-and-cry about the disastrous consequences of rising inequality for America since Thomas Frank was in diapers. READ MORE

Thanks to their rejection of the Affordable Care Act's expansion of Medicaid in states they control, GOP leaders are leaving at least five million people in an insurance "dead zone," earning too much to qualify for Medicaid but too little to obtain federal subsidies to purchase coverage... with as many as 17,000 people forecast to needlessly die each year for lack of health insurance. But GOP obstruction won't just kill people in places like Texas, Mississippi and many more. As the case of Georgia shows--where over 600,000 residents will fall into the coverage gap and as many as 1,175 will die this year--Republican policy is killing hospitals, too.... A fourth rural hospital in Georgia is shutting its doors due to a lack of patients who can pay for their medical expenses:

Now DeLong actually said that he trusted the CEA forecast at the time (more on that a little later), but Krugman didn't. His post stuck pretty closely simply to what we think about the properties of different time series with respect to unit roots. It's not even like he left his view about the possibility of extended crisis unstated - he said that we can expect output to grow "if and when" slack capacity was used again. "When", sure - but "if and when"!?!?

Tim Geithner January 2008 FOMC Minutes: “The World Is Still Looking Pretty Good”: “In January 2008–right as the U.S. economy entered a recession–the former Federal Reserve Vice Chairman (and later Treasury Secretary) was still very optimistic….

Here’s Geithner:

You know, we have the implausible kind of Goldilocks view of the world, which is it’s going to be a little slower, taking some of the edge off inflation risk, without being so slow that it’s going to amplify downside risks to growth in the United States. That may be too optimistic, but the world still is looking pretty good. Central banks in a lot of places are starting to soften their link to the dollar so that they can get more freedom to direct monetary policy to respond to inflation pressure. That’s a good thing. U.S. external imbalances are adjusting at a pace well ahead of expectations. That’s all good, I think. As many people pointed out, the fact that we don’t have a lot of imbalances outside of housing coming into this slowdown is helpful. There’s a little sign of incipient optimism on the productivity outlook or maybe a little less pessimism that we’re in a much slower structural productivity growth outlook than before. The market is building an expectation for housing prices that is very, very steep. That could be a source of darkness or strength, but some people are starting to call the bottom ahead, and that’s the first time. It has been a long time since we’ve seen any sense that maybe the turn is ahead. It seems unlikely, but maybe they’re right. In the financial markets, I think it is true that there is some sign that the process of repair is starting. Having said that, though, I think it is quite dark still out there…. Like everyone else, we have revised down our growth forecast. We expect very little growth, if any, in the first half of the year before policy starts to bring growth back up to potential....

Igor Volsky:This New Study Proves That Background Checks Save Lives: "Missouri’s decision to repeal its law requiring all handgun purchasers to obtain a 'permit-to-purchase' (PTP) verifying they passed a background check led to a 16 percent increase in the state murder rate, a new study from Johns Hopkins Center for Gun Policy and Research has found....

State legislators eliminated the permit requirement in June of 2007, as part of a larger firearms bill granting criminal and civil immunity to homeowners who use deadly force against intruders.... Removing the licensing requirement contributed to an “additional 55 to 63 murders per year in Missouri between 2008 and 2012.” The increases occurred in the first full year after the repeal, during which the state saw “large increases in the number of guns diverted to criminals and in guns purchased in Missouri that were subsequently recovered by police in border states that retained their PTP laws.” The analysts controlled “for changes in policing, incarceration, burglaries, unemployment, poverty, and other state laws adopted during the study period that could affect violent crime,” a press release for the study says....